To have legal personality means to be capable of having legal rights and obligations[1][2] within a certain legal system, such as entering into contracts, suing, and being sued.[3] Legal personality is a prerequisite to legal capacity, the ability of any legal person to amend (enter into, transfer, etc.) rights and obligations. In international law, consequently, legal personality is a prerequisite for an international organization to be able to sign international treaties in its own name.

Legal persons (lat. persona iuris) are of two kinds: natural persons (also called physical persons) and juridical persons (also called juridic, juristic, artificial, or fictitious persons, lat. persona ficta) – groups of individuals, such as corporations, which are treated by law as if they are persons.[1][4][5] While human beings acquire legal personhood when they are born, juridical persons do so when they are incorporated in accordance with law.

Juridical personality allows one or more natural persons (universitas personarum) to act as a single entity (body corporate) for legal purposes. In many jurisdictions, artificial personality allows that entity to be considered under law separately from its individual members (for example in a company limited by shares, its shareholders). They may sue and be sued, enter contracts, incur debt, and own property. Entities with legal personality may also be subjected to certain legal obligations, such as the payment of taxes. An entity with legal personality may shield its members from personal liability.

Corporations are bodies corporate created by statute or charter. A corporation sole is a corporation constituted by a single member, in a particular capacity, and that person's successors in the same capacity, in order to give them some legal benefit or advantage, particularly that of perpetuity, which a natural person could not have had. Examples are a religious officiant in that capacity, or The Crown in the Commonwealth realms. A corporation aggregate is a corporation constituted by more than one member.

Unincorporated associations, that is aggregates of two or more persons, are treated as juridical persons in some jurisdictions but not others.

Partnerships, an aggregate of two or more persons to carry on a business in common for profit and created by agreement. Traditionally, partnerships did not have continuing legal personality, but many jurisdictions now treat them as having an independent legal personality.

Not all organizations have legal personality. For example, the board of directors of a corporation, legislature, or governmental agency typically are not legal persons in that they have no ability to exercise legal rights independent of the corporation or political body which they are a part of.

The doctrine has been attributed to Pope Innocent IV, who seems at least to have helped spread the idea of persona ficta as it is called in Latin. In the early church, the doctrine of persona ficta allowed monasteries to have a legal existence that was apart from the monks, simplifying the difficulty in balancing the need for such groups to have infrastructure though the monks took vows of personal poverty. Another effect of this was that as a fictional person, a monastery could not be held guilty of delict due to not having a soul, helping to protect the organization from non-contractual obligations to surrounding communities. This effectively moved such liability to individuals acting within the organization while protecting the structure itself, since individuals were considered to have a soul and therefore capable of being guilty of negligence and excommunicated.[9]

In the common law tradition, only a person could sue or be sued. This was not a problem in the era before the Industrial Revolution, when the typical business venture was either a sole proprietorship or partnership—the owners were simply liable for the debts of the business. A feature of the corporation, however, is that the owners/shareholders enjoyed limited liability—the owners were not liable for the debts of the company. Thus, when a corporation breached a contract or broke a law, there was no remedy, because limited liability protected the owners and the corporation wasn't a legal person subject to the law. There was no accountability for corporate wrongdoing.

To resolve the issue, the legal personality of a corporation was established to include five legal rights—the right to a common treasury or chest (including the right to own property), the right to a corporate seal (i.e., the right to make and sign contracts), the right to sue and be sued (to enforce contracts), the right to hire agents (employees) and the right to make by-laws (self-governance).

Since the 19th century, legal personhood has been further construed to make it a citizen, resident, or domiciliary of a state (usually for purposes of personal jurisdiction). In Louisville, C. & C.R. Co. v. Letson, 2 How. 497, 558, 11 L.Ed. 353 (1844), the U.S. Supreme Court held that for the purposes of the case at hand, a corporation is "capable of being treated as a citizen of [the State which created it], as much as a natural person." Ten years later, they reaffirmed the result of Letson, though on the somewhat different theory that "those who use the corporate name, and exercise the faculties conferred by it," should be presumed conclusively to be citizens of the corporation's State of incorporation. Marshall v. Baltimore & Ohio R. Co., 16 How. 314, 329, 14 L.Ed. 953 (1854). These concepts have been codified by statute, as U.S. jurisdictional statutes specifically address the domicile of corporations.

The term legal person ("pessoa jurídica" in Portuguese) is used in legal science for designating an entity with rights and liabilities which also has legal personality. Its regulations are largely based on Brazil's Civil Code, among other normative documents.

"Registered trade unions are legal persons. They may, through a unified representation that is proportional to their membership, enter into collective labour agreements that have a mandatory effect for all persons belonging to the categories referred to in the agreement."

For a typical example of the concept of legal person in a civil law jurisdiction, under the General Principles of Civil Law of the People's Republic of China, Chapter III, Article 36., "A legal person shall be an organization that has capacity for civil rights and capacity for civil conduct and independently enjoys civil rights and assumes civil obligations in accordance with the law."[12] Note however that the term civil right means something altogether different in civil law jurisdictions than in common law jurisdictions.

In part based on the principle that legal persons are simply organizations of natural persons, and in part based on the history of statutory interpretation of the word "person", the U.S. Supreme Court has repeatedly held that certain constitutional rights protect legal persons (such as corporations and other organizations). Santa Clara County v. Southern Pacific Railroad is sometimes cited for this finding because the court reporter's comments included a statement the Chief Justice made before oral arguments began, telling the attorneys during pre-trial that "the court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does." Later opinions interpreted these pre-argument comments as part of the legal decision.[13] As a result, because of the First Amendment, Congress may not make a law restricting the free speech of a corporation, a political action group or dictating the coverage of a local newspaper,[14] and because of the Due Process Clause, a state government may not take the property of a corporation without using due process of law and providing just compensation. These protections apply to all legal entities, not just corporations.

^[...] men in law and philosophy are natural persons. This might be taken to imply there are persons of another sort. And that is a fact. They are artificial persons or corporations [...]Deiser, George F. (December 1908). "The Juristic Person. I". University of Pennsylvania Law Review and American Law Register. 48 New Series (3): 131–142. JSTOR3313312.

^Besides men or “natural persons,” law knows persons of another kind. In particular it knows the corporation, and for a multitude of purposes it treats the corporation very much as it treats the man. Like the man, the corporation is (forgive this compound adjective) a right-and-duty-bearing unit.H.A.L. Fisher, ed. (1911). "Moral Personality And Legal Personality 1". The Collected Papers of Frederic William Maitland. Cambridge University Press.